VAT: The principle of 'abuse'
In P Newey (t/a Ocean Finance) v HMRC (TC00487 – 18 May) a financial adviser (N) who was registered for VAT was the controlling shareholder of a Jersey company (AC) which provided loan broking services in the UK.
HMRC issued an assessment on N charging VAT of more than £10 000 000 on the basis that he should be treated as supplying the loan broking services and was liable to a 'reverse charge' under VATA 1994 s 8(1) in respect of advertising services supplied by another Jersey company (W).
N appealed. The Tribunal allowed his appeal finding that N had established the 'loan broking operation' in Jersey rather than the UK in order to 'avoid the irrecoverable VAT on advertising costs'.
However this finding did not entitle HMRC to treat N rather than AC as the...
